3 Top Small-Cap Blend Mutual Funds for Excellent Returns
Those with a high-risk appetite as well as an interest in growth and value investing may choose small-cap blend mutual funds to boost their portfolio. While blend funds, also known as “hybrid funds,” aim for value appreciation by capital gains, small-cap funds are expected to have higher growth prospects than their large and medium counterparts. Blend funds provide significant exposure to both growth and value stocks and owe their origin to a graphical representation of a fund’s equity style box.
Meanwhile, funds investing the majority of their assets in securities of companies with market capitalization lower than $2 billion are generally considered small-cap mutual funds. Although funds investing in small-cap stocks are believed to have more exposure to market volatility than the large or medium ones, they are also expected to provide diversification across sectors and companies. Moreover, small-cap companies are believed to be less affected by a global downturn thanks to less international exposure.
Below, we share with you three top-ranked, small-cap growth mutual funds, namely Fidelity Series Small Cap Discovery Fund FJACX, Vanguard Strategic Small-Cap Equity Fund Investor Shares VSTCX and Fuller & Thaler Behavioral Small-Cap Equity Fund FTHNX. Each has earned a Zacks Mutual Fund Rank #1 (Strong Buy) and is expected to outperform its peers in the future. Investors can click here to see the complete list of small-cap blend funds.
Fidelity Series Small Cap Discovery Fund invests most of its net assets in small-cap domestic and foreign companies with a market cap similar to that of the Russell 2000 Index or the S&P SmallCap 600 Index at the time of purchase. FJACX chooses to invest in growth or value stock or sometimes both by using fundamental analysis factors like financial conditions, industry position, along with market and economic conditions.
Fidelity Series Small Cap Discovery Fundhas three-year annualized returns of 15.2%. As of the end of January 2022, FJACX had 82 issues and invested 3.49% of its net assets in Concentrix Corporation.
Vanguard Strategic Small-Cap Equity Fund Investor Shares invests most of its net assets in small-cap securities with a market cap similar to the companies listed in the MSCI US Small Cap 1750 Index along with a risk profile similar to that of the said index. VSTCX chooses to invest in stocks with an appropriate balance between strong growth potential and reasonable valuations with respect to its industry peers using quantitative methods.
Vanguard Strategic Small-Cap Equity Fund Investor Shareshas a three-year annualized return of 14.3%. VSTCX has an expense ratio of 0.26% compared with the category average of 1.03%.
Fuller & Thaler Behavioral Small-Cap Equity Fund seeks capital appreciation by investing most of its assets along with borrowings, if any, in small-cap U.S.-based companies. FTHNX advisors choose to invest in companies that are incorporated, headquartered, and earn most of its revenues in the United States.
Fuller & Thaler Behavioral Small-Cap Equity Fund has three-year annualized returns of 15.0%. Raife Giovinazzo has been one of the fund managers of FTHNX since February 2013.
To view the Zacks Rank and the past performance of all small-cap blend mutual funds, investors can click here to see the complete list of small-cap blend mutual funds.
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